FICO may not be the holy grail you have made it out to be. Wealthy people care about income and assets – not about credit and debt. Your credit score may actually be worthless to you.
So why does the average consumer worry so much about his credit rating? Brainwashing.
Credit. Buy things you don’t need with money you don’t have. Sounds like a country I know.
5 reasons why your FICO score is a false idol:
1. Credit Score Does Not Pay Bills.
If you have income to cover your bills, what do you need credit for. If you don’t have enough money to buy gas, to pay for groceries, or to handle life’s expenses, you have much bigger problems than a fluctuating number determined by a computer algorithm.
2. Out of Your Control.
You can spend thousands of dollars trying to protect your credit score – often to no avail.
Not all bills are created equal. The credit score might improve if you pay certain bills on time, such as a POTS line phone (Plain Old Telephone Service – it’s a real term), mortgage, gas, electric, and other utilities. But let your debt-to-credit ratio get too high on your credit cards and you can get slammed no matter how current your payments are.
3. Inaccurate.
Credit bureaus are not human, but boy can they make mistakes. And usually not in your favor.
Your income does not raise or lower your score. How can that be? Remember, your credit score only cares about your payment history and debt-to-credit ratio. Nothing more.
4. Too Much Debt.
Without a high credit score, it’s almost impossible to take on too much debt. If you cover your bills each month and live within your means, you don’t need credit anyway.
If you have a high credit scores, banks will flood your mailbox with offers to give you more credit.
Lose your job, suffer an illness, or don’t pay on time, and you will wonder how the word easy was ever attached to credit.
5. No FICO at Your Wake.
Death and taxes are inevitable. You can’t successfully avoid either. On the other hand, your credit score is left at the graveside.
Living a prosperous and wealthy life is a desire of most humans. I don’t mean just spiritual wealth, but real dollars. No man or woman can live to the fullest without money. Having a debt master will surely burden your life.
Eat real food. Drink fine wine. Make love to your wife before the sun comes up.
And live within your means.
Don’t lose sleep or thousands of dollars protecting your credit.
Look for more contrarian financial strategies at Burn Down the Freaking Mission.